A few days ago Facebook announced they are going to introduce a new digital currency called "Libra".
A group of investor companies, along with several nonprofits, will launch the digital currency project in the first half of the next year. But what is Libra and what makes it different from other virtual currencies?
What kind of virtual currency is Libra? Libra is a virtual/digital currency supported by real money reserves, such as bank deposits and government securities, and is protected by a guardian network.
Although Libra's price may not always be close to its support counterpart, Facebook claims that the buyers and owners of the currency will have "high security measures" to convert it into traditional currencies. A network for exchanging this currency is provisioned by Facebook, which no more information has yet published about it.
Libra's Fundamental Technology and Its Differences with Bitcoin
Transactions or exchanges based on Liberty, are using blockchain technology and a set of connected computers. Only the institutions that have the necessary permissions will have access to this computer network. In this regard, the way Libra is run is different from Bitcoin (the world's first and most reputable cryptocurrency), since Bitcoin is not regulated by any core organization.
Libra's executable software will be open source, meaning that other companies can build applications based on the structure of the software. Also, the founder association of Libra plans to provide a blockchain version which will not need any special permission to operate. This version will be released five years after Libra's initial launch.
Who are the members of this virtual money community?
The governing body of Libra has 28 members and is a nonprofit institution with its headquarters in Geneva, Switzerland. It will monitor major decisions made on this virtual currency.
The minimum investment required to be part of this organization was 10 million dollars, with the exception of non-profit members such as the Kiva Financial Group, which did not have such a requirement.
Libra's goal is to have at least one hundred members before its launch. Each of these members will have one vote in key decision makings.
Facebook itself is a member of this community through an institution called Calibra. Calibra is a new Facebook subsidiary company and provides a virtual wallet for the Libra currency.
Facebook virtual wallet; Special bonus for Libra
Buyers can use Facebook's wallet called Calibra to save, deposit, and spend Libra. It will be available in the form of a mobile app, as well as a special feature on Facebook Messenger and WhatsApp.
Privacy and security of the new virtual money
Anyone who wants to use the Libra must go through a process of identification. This process, called "Know Your Customer", prevents financial crimes by verifying the identity of the user based on his formal identification documents.
Facebook has also announced that it will support the users on accidental events. For example, if the user lost his mobile phone, forgot their password or user's account is stolen, Facebook returns that amount to it the authentic user's account.
Facebook executives also promised not to use Caliber account information for users for promotional purposes. Although Facebook does not have a clean sheet when it comes to protecting user privacy, with the new measures and promising features announced by Facebook, we will need to wait until next year to see if Libra can become a successful currency or not.
